In the course of providing legal services to a client, a lawyer may be asked to prepare a report or summarize an investigation for a corporation’s board of directors, with the understanding that the report will also be shared with the corporation’s officers and directors or even shareholders. This is a common occurrence, even though the attorney-client relationship may only exist between the lawyer and the board of directors. The board and the lawyer may agree that the lawyer’s report will be shared with others for the purpose of disseminating information (or even as support for a decision made by the board).

Imagine a situation when the officers and directors rely on the lawyer’s opinion to their detriment, or where the officers and directors (or shareholders) make claims against the board based on what is in the report. Can the officers and directors sue the lawyer for providing negligent advice that they relied on, even without an attorney-client relationship? Can the board sue the lawyer for creating risk for them by preparing a report that caused others to bring claims against the board?

The answer to these questions is that it depends. Rule 2.3 of the ABA Model Rules of Professional Conduct governs situations in which lawyers prepare evaluations for use by those other than the client. It is not uncommon for lawyers to be hired to prepare opinions for consumption by others, but it helps to be aware of the risks.

What is the nature and scope of the requested opinion?

Attorneys’ obligations generally run directly—and exclusively—to their clients and not to the public at large. This is different from an accountant, for example, who may prepare reports for public consumption and may owe duties to the investing public. As a result, lawyers who are preparing materials for review or consumption by others separate from their own clients may face a tension between the duties owed to the client (including the duty of candor in explaining legal risks to clients) and the purpose of the evaluation (which may be, indirectly, to help support the client’s position or goals).

For example, corporations often retain attorneys to perform internal investigations that serve the primary purpose of advising the corporation, but may also involve reporting the investigation results to shareholders or to regulatory agencies. As a result, the comments to Model Rule 2.3 caution that “careful analysis of the situation is required.” In addition, the requisite “informed consent” of the client under Rule 2.3 before any report is shared may require that the attorney advise the client regarding the potential risks of sharing an evaluation with a third party. 

Having these discussions before commencing the representation can help ensure both the lawyer and client understand the purpose of the representation. 

What about client confidentiality?

Model Rule 2.3(c) directly addresses the risk to client confidentiality posed by preparing reports for public consumption by noting that “[e]xcept as disclosure is authorized in connection with a report of an evaluation, information relating to the evaluation is otherwise protected by Rule 1.6 [the rule regarding confidentiality].”

Accordingly, when retained to provide a legal opinion, lawyers can take the same precautions with respect to the client’s confidential information and not disclose any such information unless it is necessary for the evaluation (or the client consents).

What are the other risks?

Although preparing a report that may be relied on by others typically does not create an attorney-client relationship with those third parties, it may or may not create a legal duty owed by the lawyer to those known third parties, as recognized by Comment [3] to Model Rule 2.3 (“When the evaluation is intended for the information or use of a third person, a legal duty to that person may or may not arise. That legal question is beyond the scope of this Rule. However, since such an evaluation involves a departure from the normal client-lawyer relationship, careful analysis of the situation is required.”). But even for unknown third-parties that rely on a public report and claim that they did so to their detriment, they may still be able to sue the attorney who prepared the report.

Courts typically review whether it was reasonable and foreseeable for the claimant to believe they could rely on the report and for the attorney to believe that those third-parties could rely on their work. To decrease the risk of liability and limit potential exposure, opining lawyers often choose to include such limitations and disclaimers on the face of the opinion to make it clear who the intended audience is, who may rely on the opinion and/or that the lawyer is relying on facts provided by the client without independent investigation. The lawyer also can include disclaimers regarding the scope of law and other limitations.

There also is a risk that a client could bring a claim against their lawyer alleging that releasing the report publicly was not in the client’s best interest, or that the report created additional risk for the client (for example, by being incomplete or incorrect). Thus, defining the scope of the representation—and the potential risks to the client—early on can be critical. 

Providing legal opinions that will be presented to others can also create the risk of a conflict of interest. For example, as noted by Comment [3] to Model Rule 2.3, “if the lawyer is acting as advocate in defending the client against charges of fraud, it would normally be incompatible with that responsibility for the lawyer to perform an evaluation for others concerning the same or a related transaction.”

While there is nothing inherently improper in providing a legal opinion with the knowledge that the opinion will be shared with third parties, a review of Rule 2.3 will help lawyers meet the goals of the representation as well as their ethical obligations.